The PayScale Index anticipates average U.S. wage growth of 0.6 percent year over year in Q4 2015, which indicates that many regional economies are bouncing back and the job market is stronger than ever. On top of that, 29 states and the District of Columbia have minimum wages above the federal minimum wage, and many more cities are increasing wages to keep up with the cost of living. All of this should be good news for employers, but some are not exactly thrilled about it.
What’s going on?
Increasing wages often signal an increase in consumer spending, and for most small businesses that rely on community support, this can be a good thing. But there is reason for concern for small businesses, who represent the largest increase in wages (0.9 percent). They are also responsible for more than half of the number of new jobs created (around 2 million new jobs in 2015). This puts added pressure on small businesses to increase payroll, provide adequate benefits under the ACA, and ensure they can compete with larger businesses for talent.
Small business sector is getting nervous
According to the October 2015 Small Business Economic Trends report from the National Federation of Independent Business, small business optimism is flat-lining. The survey indicated that 11 percent of the businesses polled plan to increase hiring, with 27 percent job openings and another 13 percent believing this may be a good time to expand. However, the report also revealed that confidence in earnings trends dropped by 16 percent and there was a drop by 4 percent in their view on the economic outlook.
The main concern that employers have in the small business sector is how they can attract the right talent, when bigger companies can offer higher starting salaries and benefit programs. If small businesses are destined to keep supporting wage hikes, as indicated by the PayScale Index data, then there must be an even playing field so that they can recruit and retain great talent.
What do you think?
We’d like to hear from you, and especially our small business folks. What concerns do you have regarding wage increases and talent acquisition?